A cross-regional private gas operator committed to building a clean energy investment platform, the company completed a backdoor listing in 2012. Relying on the advantages of midstream piping, it built a gas business centered on downstream distribution+midstream forwarding business, and expanded the gas distribution area through mergers and acquisitions. It now covers about 40 cities including Hebei, Shandong, Hunan, and Jiangsu. At the same time, the company expanded the desulfurization and denitrification flue gas treatment business for small and medium-sized boilers in the non-power industry through the acquisition of Zhengshi Tongchuang. In 2015, the company achieved revenue of 2,573 million yuan and net profit of 247 million yuan. Benefiting from the acceleration of Beijing-Tianjin-Hebei coal-to-gas conversion, the gas distribution business is expected to accelerate growth in Beijing's ecological protection and environmental improvement, and rely more on the surrounding area, that is, overall environmental management in Beijing-Tianjin-Hebei and surrounding areas. Based on the government work report and the Ministry of Environmental Protection's many statements, we expect that smog control in the Beijing-Tianjin-Hebei region is still the core content of current environmental management, and that natural gas substitution is clearly positioned as one of the key solutions for scattered coal. Considering that the company has huge space for coal-to-gas distribution areas such as Hebei and Shandong, etc., the company's gas consumption growth rate is expected to increase in the future. The company's current gas supply is only 20% of its gas supply capacity. Future gas volume growth will drive a faster increase in profit before tax. In the past two years, epitaxial mergers and acquisitions have continued to accelerate. Resource-rich companies in the energy business industry, which are the majority shareholders, are continuously speeding up the pace of epitaxial mergers and acquisitions. In 2016, various projects such as Leiyang in Hunan, Tianhong in Suzhou, and Kuancheng in Hebei have expanded distribution areas. We expect that in the future, the company will continue to accelerate the pace of external mergers and acquisitions, and will not rule out mergers and acquisitions of projects such as new distribution regions and industrial chain extensions. Chen Yihe, the actual controller of the company, is the chairman of China Reserve Energy. China Reserve Energy specializes in oil, natural gas and other energy exploration, development, reserve, storage, transportation, energy and chemical industries. It owns many enterprises such as Zhangjiakou CDG, Zhangjiakou State Storage Energy Logistics, and Shanghai State Storage Energy Group. It is rich in resources at all ends of the energy industry chain, and its business covers most regions of the country. The company has acquired 2 pipeline networks and distribution companies under China Storage Energy (Zhangjiakou State Storage Pipeline Natural Gas, Leiyang State Storage). Margin profit is expected to increase from the active distribution of externalization. The “buy” rating given to the company is expected to be 0.45 yuan, 0.61 yuan, and 0.75 yuan in EPS in 16-18, and the corresponding PE is 37, 27, and 22 times. As a cross-regional private gas operator, the integrated layout of the company's middle and downstream pipeline networks is perfect, benefiting from Beijing-Tianjin-Hebei haze control. The growth rate of gas sales in business regions such as Shandong and Hebei is expected to increase. At the same time, the company continues to increase the pace of external mergers and acquisitions, and continues to expand projects such as offsite distribution and industrial chain extension, giving it a “buy” rating. Risk indicates that the progress of mergers and acquisitions is lower than expected; downstream customer development is lower than expected; the situation in the downstream industry has been sluggish for a long time; and the progress of coal-to-gas is lower than expected;